Energy prices increased on 01 October, with many businesses now concerned about the upcoming winter months and bigger bills. Between recent shortages in consumer spending and staffing, rising energy costs is hardly welcome news for SMEs.
In addition to this, there is speculation that businesses will have dwindling options to avoid the price hikes as they switch energy suppliers, with industry experts forecasting a cull in the supplier market from 70 suppliers to an estimated 10 by the end of 2021.
Now is the time for SMEs to consider how to make crucial commercial energy savings, and there are ways to save money by using energy more efficiently, accessing the support available to help meet rising costs, but the biggest saving can be made by switching business energy provider – with a price comparison site such as freepricecompare.com.
It is also important for business owners to understand why prices are rising, as it is not a shortage issue. Both Kwasi Kwarteng, Business and Energy Secretary, and Jonathan Brearley, Ofgem Chief Executive, are confident that the UK will not face outages from energy not reaching customers. It is the price of delivering it that is increasing, as the cost of wholesale gas and electricity rises.
These price increases are hitting businesses harder than usual because many SMEs are still struggling as the UK emerges from the COVID-19 pandemic, and rising inflation means expense increases make the burden heavier. All in all, UK energy customers are facing around a £140-£150 price increase* — on top of the £230 increase from earlier this year.
The price cap, which is talked about frequently, is only relevant to standard variable tariffs, otherwise known as default tariffs. Despite the price cap, because the wholesale price of energy is increasing globally and the wholesale price accounts for around 40% of the price cap framework, businesses not on fixed tariffs are still likely to be affected by rising costs.
Director at Free Price Compare, Shailesh Ramani, said, “The current energy crisis is having just as much of an impact on businesses as it is on home energy customers, if not more so. The fact that the UK has imported more gas this year than ever before isn’t helping prices either, and this trend is expected to continue as the weather gets colder, as winter approaches.
“But the main thing businesses can do to bring down their energy bills is to compare and switch suppliers, it’s that simple. And when comparing different suppliers, businesses should consider flexible tariffs that they are not strictly tied to, go with an environmentally-friendly tariff if possible, but essentially find the cheapest tariff available to them. Of course, opting for one of the big six energy suppliers could offer peace of mind amid the volatile market conditions faced right now.”
Free Price Compare, the UK’s comparison website that compares more suppliers than any other site, has created a guide to help businesses during the current energy crisis, by providing more information on how to save energy at business premises and detailing what grants are available to apply for: Business Energy Savings for Winter 2021 | Free Price Compare.
Currently, Free Price Compare is offering a price guarantee for businesses and will beat initial renewal energy quotes or give £1,000 cashback. SMEs are advised to compare their options, to see how much can be saved on business energy by switching suppliers.
Businesses should ensure they are within their current contract’s allowed exit period when switching supplier. Ofgem data shows that business switches can take up to 21 days to complete, so SMEs should aim to change energy supplier within their existing contract’s cancellation period. Otherwise, exit fees or rolling onto the same default tariff that is rising in price could apply.
* Data source: Ofgem
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